PhonePe explored investment in Dunzo’s merchant business

economictimes.indiatimes.com:

PhonePe recently made an offer to cash-strapped Dunzo to invest a significant amount in its merchant network business, at a time the latter is desperately seeking cash, sources aware of the talks said.

The proposal, however, didn’t move forward due to concerns among the troubled startup’s investors due to the strategic nature of PhonePe, which is majority owned by Walmart after its split from ecommerce firm Flipkart, these sources involved in the discussions said.

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PhonePe conducted weeks of due diligence even as Dunzo had started to show clear signs of its cash reserves depleting. Dunzo had engaged with PhonePe hoping an investment would be able to clear at least a part of its mounting debt, people aware of the dynamics of the conversation said.
Dunzo needs approval from Reliance Retail — which owns nearly 26% in the firm — before any new investor, especially a strategic investor like US retailer Walmart or others, can invest in the company.

“Reliance Retail has not been approached with any such firm proposal that could be considered,” a spokesperson for Reliance Retail said, adding that the information on PhonePe’s offer is factually incorrect. PhonePe declined to comment on the matter.


Dunzo chief executive Kabeer Biswas said he has no comments to offer on “hearsay stories”. “We are trying to run a profitable growing business and would continue to keep our heads down and execute,” he said in an email response to ET’s query.

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